Clause 40A deals with substantial acquisition of shares and requires the offeror and the offeree to inform the stock exchange when such acquisition results in an increase in the shareholding of the acquirer to more than 10%.

Clause 40B deals with takeover efforts. A takeover offer refers to change in management where there is no change in management, Clause 40B of listing agreement will not apply. However, sub clause 13 of amendment of Clause 40B also provides an exemption to the scheme approved by BIFR. There is no provision under clause 40B for exemption of non BIFR companies.

On the basis of recommendations of the Committee, the SEBI announced on Febuary20, 1997, the revised take over code as Securities and Exchange Board of India (Substantial Acquisitions of shares and Takeovers) Regulations, 1997. The objective of these regulations has been to provide an orderly framework within which substantial acquisitions and takeovers can take place.